The easiest way to obtain additional funds is to take a cash loan. However, to get it, you have to pass a credit check. The bank that carries it out will want to assess your financial capacity to return the borrowed amount plus interest.
Learn how creditworthiness is assessed when applying for a cash loan and what it should be like in order to be able to count on a positive response to a financing application.
Also check the ranking of cash loans and find the cheapest loan in 2020.
Cash credit and creditworthiness - you must know that!
Creditworthiness is a concept that every borrower should be familiar with, since it is the most important factor determining the granting of financing. It depends on how the bank assesses it, whether you get the cash loan you're applying for.
What is creditworthiness?
The banks determine the borrower's financial capacity to repay the debt incurred together with interest on a specified date. For example, if you want to borrow PLN 10,000 for a period of 3 years, the bank will first count how much the instalment of such a loan will be, and then check whether you can afford to pay it every month for the whole duration of the contract.
Analysis of the client's creditworthiness allows the institution to assess the risk of borrowing a certain amount of money. If it shows that the borrower may have problems to pay instalments because of, for example, too low or unstable income, the bank will prefer to refuse to finance it.
How does the bank assess creditworthiness when considering an application for a cash loan?
When assessing your creditworthiness, the Bank will analyse your financial standing, taking into account the following data:
- Source and amount of income - many banks require this information to be documented, e.g. by providing a certificate of employment and earnings, as it is important to them not only how much you earn, but also whether your contract will ensure that you receive income regularly throughout the loan period,
- the amount of debt - the bank will check the amount of other credit liabilities you are paying off, resulting from e.g. loans, account limits or credit cards - it will obtain information on this subject from the application you have completed and from the BIK database,
- fixed costs of living - this is influenced by the place of residence, marital status, number of people in the household, etc.
A positive credit rating will mean that your income, after deducting the fixed charges associated with maintaining and paying other liabilities, will be sufficient to repay the loan. I mean, you can afford the cash loan you're applying for.
Ability and creditworthiness
The creditworthiness test is the most important element in the verification of a loan application, but it is equally important to assess the applicant's credibility. It is not only the amount of debt that is important for the bank, but also whether you pay it back on time. To find out about this, the bank will check your credit history at the BIK, which lists all your credit commitments together with information on their timely payment.
How much creditworthiness does it take to get a cash loan?
The offer of cash loans for any purpose is very wide, but most of the products allow you to incur a liability in the amount from 1000 to 200 000 PLN for a period of 3 months to 10 years.
Depending on the amount of the loan and the repayment period, the monthly installment may therefore range from several dozen to even several thousand zlotys. It is not difficult to guess that the majority of regular income earners will have the appropriate creditworthiness to take on a small commitment to be repaid in monthly instalments of several dozen zlotys. The problem may arise with larger amounts. For example, a person receiving a minimum wage (about 1800 PLN per hand) and paying other liabilities may have a problem with paying instalments of about 1000 PLN.
It is difficult to clearly indicate what creditworthiness you need to have in order to receive a cash loan. This depends on the parameters of the liability and the specific financial situation of the borrower.
How to check your creditworthiness?
If you want to borrow money from a bank, you can calculate how much you can apply for. A free tool available on the Internet in the form of a special calculator for calculating creditworthiness will help you gain such knowledge.
As far as the credit calculator is concerned, it allows to calculate exactly what maximum amount can be applied for with a certain level of income and liabilities as well as a specific repayment period. The calculations will therefore allow you to know how much money to apply for, so that the bank will respond positively to your application.
If you find that you cannot afford the amount of credit you need, you can try to improve your creditworthiness. There are many ways to do that. For example, a simple extension of the repayment period of a liability can reduce the amount of monthly instalments, which are thus payable at a certain level of income.